On Thursday, stainless steel prices in China jumped 5% on the back of rising nickel prices and a supply shortage.
The March stainless steel contract on the Shanghai Futures Exchange rose to 14,725 yuan (roughly $ 2,281) a tonne in morning trading, the highest daily upside and the highest since late October.
The cost of producing nickel pig iron, a raw material for stainless steel, remains high as many Chinese smelters use recently purchased expensive nickel concentrate.
Nickel prices continued to climb, with the London Metal Exchange's benchmark surpassing $ 18,000 per tonne for the first time since September 2019 as continued turmoil in New Caledonia, the world's fourth-largest metal producer, heightened supply concerns.
The decline in nickel stocks in warehouses controlled by the Shanghai Stock Exchange, which more than halved in 2020, has also increased pressure on prices.